Drugs and Vaccines for Developing Countries

The world faces many challenges in addressing the health needs of the poorest in middle- and low- income countries. The economic issues that affect access to pharmaceuticals differ depending on whether the medicine treats a ‘global disease’ (one with a substantial, existing market in high-income countries) or a ‘neglected disease’ (one that largely afflicts only people in low-income countries). Medicines for global diseases widely available in richer countries often are out of reach in poorer countries for a variety of reasons, from infrastructure/governing insufficiencies to low personal incomes. For neglected diseases, subsidies and policies to mitigate risk are needed to encourage for-profit companies to develop effective medicines that even then may be unaffordable.

Much has changed over the past decade. Multinational companies (MNCs) in partnership with academia, not-for-profits, governments and foundations have increased funding and effort to develop new technologies for HIV/AIDS, TB, malaria and some other tropical diseases. Local drug and vaccine companies in emerging markets are investing resources in innovative solutions for neglected diseases as they strive to evolve from generic producers into R&D-based companies. Government and philanthropic funding increase product availability for some global disease products. Economic growth in some emerging market countries increases the attractiveness of those markets for some MNCs, which are exploring innovative strategies to expand sales and increase product availability. At the same time, MNC leadership is pursing approaches that are both commercially viable and able to make a substantive contribution to global health. Advocacy groups actively monitor what companies are doing, providing additional motivation.

Adrian Towse has collaborated with outside experts in preparing a chapter that  addresses these issues in the  forthcoming Oxford Handbook on the Economics of the Biopharmaceutical Industry. The authors describe the context of the problem of insufficient affordable medicines in developing countries and detail policies and proposals intended to increase access to global medicines by lowering prices, including differential pricing, compulsory licensing and donations. With respect to neglected diseases, they examine policies intended to stimulate development of new medicines by reducing company-born costs and risks and/or expanding the expected revenue for the manufacturer by increasing product demand. In particular, they describe ‘push’ mechanisms that subsidize research inputs and ‘pull’ mechanisms that reward research output.

The authors urge that both current and future initiatives be based solidly on a mix of theory and empirical evidence, as discussed in the paper. Since many programmes aimed at improving R&D and access are relatively recent, they believe it is too soon to ascertain which mix of approaches is optimum and under which circumstances. Continuing analysis of specific programs and initiatives, then, is essential to understanding which policies and programs work well and which do not.

Towse, A., Keuffel, E., Kettler, H.E. and Ridley, D.B.  Drugs and vaccines for developing countries. In Danzon, P. and Nicholson, S. Oxford handbook on the economics of the biopharmaceutical industry. Oxford: Oxford University Press.  (forthcoming).


Effects of Public and Charitable Research Funding

Continuing concern about the UK fiscal deficit makes it likely that government funding of health and medical research will remain under scrutiny. This will include both return on investment, in economic and health status terms, and the interplay between government and other sources of funding for medical research, specifically charitable funding.

Released today is an OHE study commissioned by Cancer Research UK that explores the interdependence between publicly funded and charity funded medical research. In particular, the study focuses on whether and how changes in the levels of government funding affect private funding for charities and, more broadly, medical research and the UK economy as a whole.

The research included a literature review and an interview programme involving key funders and stakeholders directly involved in the UK medical research system. The focus was on understanding the differences in research activities currently funded, how various stakeholders make funding allocation decisions, and the value of joint funding. In addition, OHE organised and facilitated a workshop that provided an element of peer review.

The study found substantial benefits, both financial and qualitative, from the existence of a diversity of funders for UK medical research. These include:

  • Enabling the conduct of high cost studies that could not be funded otherwise, by sharing costs and risks for research programmes
  • Providing a stable flow of financial support for medical research over the longer term
  • Building a favourable research environment by drawing on the differing skills and know-how of funders
  • Increasing research quality by creating a competitive research environment

Any future reductions in the level of government financial support for medical research are likely to cause disproportionate damage to the ability of charities to raise funds, the report concludes. The research revealed that public spending on medical research is likely to stimulate additional private donations to charities; a cut would have the opposite effect by signalling a decline in the perceived importance of funding for charities and for medical research.

Reductions in the level of government financial support for medical research are likely to have broader negative effects. These are discussed in the report and include, for example, a decline in UK GDP, the possible shifting of the locus of some research to outside the UK, a weakening of the UK’s medical research capacity, and potential harm to standards of care for patients in the UK.

The study recommends the collection or generation of additional UK-specific evidence to fill important gaps in knowledge. This includes how and to what extent public funding of science affects the level of private contribution to UK charities for medical research.

Download Garau, M., Mordoh, A. and Sussex, J. (2011) Exploring the interdependency between public and charitable research. Report for Cancer Research UK. London: Office of Health Economics.


New: Antimicrobial Drug Incentives

OHE has just made available Research Paper 11/02, Incentives for New Antimicrobial Drugs.

Antimicrobial resistance (AMR) is becoming a major global public health threat and has begun to command attention from European and US policy makers. An initial focus on monitoring AMR and conserving existing treatments by cutting down on misuse has been complemented by moves towards addressing the paucity of new drugs in the R&D pipeline of the pharmaceutical industry.

The authors identify five economic challenges: the utilisation externality; the lack of incentives for R&D arising from use restrictions, low prices, and scientific and regulatory challenges; the global joint sunk nature of R&D cost; the need for access to drugs in middle and low income countries; and failures in the market for point of care diagnostics.  Recommended is a hybrid combination of “push” and “pull” incentives: higher prices linked to targeted use with diagnostic tests and/or an AMC-based “prize” for registering (but not necessarily using) desired new drugs, linked also to push measures.

The authors see US and European collaboration on incentives as desirable, but not if achieving agreement leads to delays. Action on conservation needs to be global and linked to use of new products.  TRIPS provisions and national sensitivities on this issue present serious challenges, as seen in the 2010 reaction to evidence on the origins of NDM-1.

Download Towse, A. and Sharma, P. (2011) Incentives for R&D for new antimicrobial dugs. OHE Research Paper 11/02.  London: Office of Health Economics.


Valuing the National Clinical Assessment Service

The UK appears to be unique in its National Clinical Assessment Service (NCAS), intended specifically to help health care providers in the NHS deal with problem clinicians. Established in 2001, the NCAS provides support, on request, to all NHS organisations employing or contracting with doctors, pharmacists, and dentists. Currently, the NCAS is financed from central NHS funds, not from charges to NHS organisations. By 2013, however, the NCAS is to become self-funding (a decision made after completion of the research summarised below).

OHE’s latest Research Paper reports on a project meant to establish how much referrers in the NHS value NCAS’s services and the relative value placed on different attributes and types of service. Funded by an unrestricted grant from the NCAS, the project used a mix of qualitative and quantitative methods to elicit information from potential referrers, including a discrete choice experiment (DCE) that provided estimates of relative values and willingness to pay.

The qualitative aspects of the study included a literature review, semi-structured interviews with six senior NCAS staff members and with the medical, dental and pharmacy professions (BMA, BDA and RPS), and discussion groups with a total of 23 senior medical and other NHS managers in each of the four UK nations. The quantitative DCE elicited responses from 450 senior NHS managers responsible for managing clinical performance concerns that could be referred to the NCAS.

The DCE results suggest that the senior NHS managers who participated in the research valued a full package of support at £161.56 per year for each whole-time-equivalent doctor, dentist or pharmacist. Approximately 200,000 such health professionals currently are employed by or under contract to the NHS, making the value of a full package of services covering them all over £32 million per year. Currently, the NCAS provides all these services at an annual cost of £9 million (2008/09).

The paper discusses in some detail the nuances that were revealed by the research — for example, the determinants of variations in preferences for particular packages and in willingness to pay – and factors that may affect changes in demand for NCAS’s services over time.

Download Watson, V., Sussex, J., Tetteh, E. and Ryan, M. (2011) Managing poorly performing clinicians: The value of independent help. OHE Research Paper 11/01. London: Office of Health Economics.


Exploring Local NHS Decisions about Investment

OHE is pleased to welcome Jamie Garside to the team.  Jamie recently graduated with an MSc in health economics (with Distinction) from City University London.

Jamie is a temporary Research Fellow at the Centre for Health Economics at the University of York. For the coming few months, he will be based at OHE working with Professors Nancy Devlin (OHE’s Director of Research) and with David Parkin (Chief Economist at the South East Coast Strategic Health Authority).

Jamie will be investigating decisions being made at the local level in the NHS — for example, by Primary Care Trusts (PCTs) – to invest or disinvest in health care services.

This work is one aspect of a wider research project being led by Professor Mark Sculpher at the University of York, funded by the NIHR[1]-MRC[2] Methodology Research Programme, to develop methodologies to identify the marginal cost of a QALY in the NHS. This work was funded by MRC as part of its programme of research relevant to NICE. The project is mentioned in the UK Government’s current consultation on value based pricing as generating results of direct relevance to the question of what NICE’s cost effectiveness threshold should be.

OHE’s work on this topic aims to identify specific examples of health care services ‘at the margin’ in the NHS. This builds on previous research on local level decision making. That information will be used to complement the econometric modelling work being led from the University of York, which forms the principal part of the project.

[1] National Institute for Health Research

[2] Medical Research Council



Seminar Briefing on Science Policy

Science Policy ResearchAt a recent OHE seminar, Prof Ben Martin (Science and Technology Policy Studies at SPRU, University of Sussex) presented the results of his extensive literature review and qualitative research on how the field of science policy research has evolved and advanced in the 50 years since its inception.  We summarised his presentation in an earlier blog post.  The full text now is available for download from the OHE website.

Download Martin, B.  Science policy research: Having an impact on policy? Seminar Briefing. (7). London: Office of Health Economics.


The Impact of Science Policy Research

BrainOHE hosted a lunchtime seminar on 6 September with Prof. Ben Martin, Professor in Science and Technology Policy Studies at SPRU1, University of Sussex.  The focus was on science policy research and its impact on policy making.

Science policy research, according to Prof Martin, is ‘economic, policy, management and organisational studies of science, technology and innovation (STI) with a view to providing useful inputs to decision-makers concerned with policies for and the management of STI’.  The field is important because STI is important: it is a source of progress, a major contributor to the wealth of nations, provides the basis for new goods and services and for new capabilities, and contributes to changes in the quality of life and the environment.  As globalisation and international competition increase, STI is gaining even greater importance.  It also carries risks, however, and social costs.  For these reasons, effective policies to encourage and manage STI are essential.

Prof Martin presented the results of his extensive literature review and qualitative research on how the field of science policy research has evolved and advanced in the 50 years since its inception.  He identified 20 major changes in methodology and understanding of the nature of innovation, which itself has changed over time.  These include, for example, adding innovation to labour and capital to explain economic growth, and the recognition that innovation depends not just on individual actors in a system, but on the strength of the links among actors in different sectors.

Although advances in understanding STI are important, the critical questions are whether and how science policy research affects STI policy choices. Research on that issue is scarce; Prof Martin offered his thoughts based on observation and personal experience.  He noted that uptake of science policy research by decision makers and has been sporadic and selective.  As in the case of the relationship between science and innovation, ensuring receptiveness to policy research often depends on responding to demand, finding a persuasive ‘product champion’ and providing a product that the ‘market’ easily can digest and put to use.  Prof Martin suggested that this requires some flexibility and political astuteness on the part of the researcher, who must identify clear policy needs that fit into the wider political context, be able to take advantage of opportunities as they arise and deliver results on time.

The most receptive person often is not the top policy maker, but an adroit civil servant who provides the information on which discussion and subsequent decisions are based.  Moreover, what peers in science policy research might demand from one another in terms of thoroughness and sophistication may be far more than policy makers can or will use.  Researchers must find a balance that maintains the integrity of the research process, but also ensures that the results are sufficiently accessible.  Providing effective input into STI policy decisions, finally, requires perseverance; most interactions involve ‘knowledge creep’ rather than a ‘direct hit’.

In closing, Prof Martin called for science policy researchers to be innovative themselves.  He noted that many studies of innovation still dwell on the central issues of the past decade – manufacturing, productivity and wealth creation.  Manufacturing in the UK now accounts for about 15 percent of GDP; 85% is produced by services and other non-manufacturing sectors.  In addition, sustainability and well-being or quality of life have risen in importance in STI policy worldwide.  Science policy research needs not only to keep step with these changes, but also to produce truly innovative approaches to these important, emerging issues.

[1] Science and Technology Policy Research

Download a comprehensive account of the seminar here.